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The Payments Ace dishes on merchant services credit card processing

Editor’s note: Although the approach is lighthearted, the information featured in this mock advice column is educational. The intent is to help business owners become more knowledgeable about merchant services credit card processing, so they feel more confident choosing the right payment solution for their business.

Dear Payments Ace,

I’m finally opening my dream business—a coffee shop and pet boutique, “Best Friends Brew.” I know the majority of my customers will want to pay with a credit or debit card. What’s the first thing I need to do to be able to start accepting credit cards?

Sincerely,

Off Leash and Caffeinated

Dear Off Leash and Caffeinated,

First of all, sit and stay like a good dog, while I explain your options. You have two options to begin accepting credit card payments. One requires that you establish your own merchant services credit card processing account, while the other doesn’t.

If you sign up with a PayFac, also known as a payment facilitator or aggregator, you can skip opening your own merchant account, because your business will register under a master account managed by the PayFac. There are fewer steps to setting up payments with a PayFac like Square or PayPal, so this can be a good option for smaller businesses with fewer products and a lower sales volume.

However, if you plan to grow your business and want more flexibility in terms of rate plans and payment acceptance types, opening your own merchant account may be the better way to go. You can do this through your financial institution, an ISO, your POS hardware provider, or a payment processor directly. Underwriting is required for most merchant accounts, so the setup process can take a bit longer than with a PayFac. But in the end, you will have more options in terms of customization and rate negotiation.

Enjoy the ride,

The Payments Ace

Dear Payments Ace,

I’ve been accepting credit and debit cards at the local hardware store I own for a while now. Recently, larger construction companies have started buying building supplies from us instead of the big box chain next door. They appreciate our personal touch, but also want some of the same services my competition offers, including monthly billing. Can my merchant services account help me do this?

Sincerely,

Hammers & More

Dear Hammers & More,

First off, congratulations on successfully competing against the big guys. Second, absolutely! The beauty of today’s merchant services offerings is that many offer solutions that were previously only available to larger merchants. Recurring billing is one of them. The two most important considerations with recurring billing solutions are keeping customers’ payment information secure and making sure it’s up-to-date.

Be sure to ask your merchant services provider about tokenization and account updater services, so you can let your customers know their card information is safe and secure in your hands.

Tokenization is commonly used to protect sensitive credit card data for recurring billing. It works by replacing the numbers with a “token” that conceals the actual data, and is used for subsequent transactions. An account updater service eliminates the hassle of tracking down customers to update cards that are declined due to expiration dates or other issues. By keeping card numbers current, account updater services help reduce and recover declined card authorizations.

Happy hammering,

The Payments Ace

Dear Payments Ace,

My husband and I own a flower shop. Sales have been so brisk that we considered opening a second location, but ultimately decided to build out our website instead. We receive many orders over the phone, and figure that making it possible to order online will save our staff time and add to the convenience for our customers. What do we need to know about adding online payments to our merchant services account?

Sincerely,

Forever Floral

Dear Forever Floral,

You are spot on about adding eCommerce capabilities to your store’s website as more and more consumers expect to be able to go online to buy whatever they want, whenever they want. You should begin by finding out if your current merchant services provider offers eCommerce solutions that will work with your current processing systems. Many do, and it’s more efficient to use one provider for both in-store and online payments.

If you already have a website, facilitating online payment acceptance can be as easy as adding a shopping cart. If you are starting from scratch, you will want to be sure your payment processing partner is equipped to build out your website complete with checkout and shopping cart features.

In addition to the major card brands, you should consider accepting other payment types like ACH and eCheck. The more payment options you offer consumers, the more likely they are to do business with you.

Last but not least, security is a big issue with eCommerce, so it’s important that your online payment solution is equipped with adequate protections such as tokenization, chargeback prevention tools, and fraud screening features. Make sure to find out about the security solutions your provider offers.

Keep it sunny,

The Payments Ace

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